- Not all deals on South Africa's online stores are as great as they sound.
- Stores do offer discounts, but in most cases the claimed deals are the result of some creative accounting.
- We randomly selected 10 items from OneDayOnly and Takealot Daily Deals and checked how accurate their claimed discounts are.
- In both cases we found big anomalies between claimed and actual discounts.
- For more stories go to www.BusinessInsider.co.za.
Many online stores in South Africa highlight so-called deals that make direct claims about discounts shoppers are allegedly receiving. They express these either as rand or percentage discounts, and often post a before-and-after price to make the deal seem that much more enticing.
The two most prominent among SA's biggest online stores - OneDayOnly and Takealot - place special emphasis on their exclusive deep discounts that are only available on select items for a limited amount of time. And yet historically, many of these deals haven't actually checked out.
The concept of a limited-time offer plays on the fear of missing out and is hardly a new or innovative strategy to drive more sales on online stores. A paper from 1994, titled Do Coupon Expiration Dates Affect Consumer Behaviour does a deep dive into the topic, and the internet is littered with plugins, products, and courses that aim to streamline this for businesses in the online space, too.
"Limited-time offers work like a charm on online shoppers because they give prospects a compelling reason to make a purchase by driving urgency," says one company peddling a "complete guide" on the strategy.
E-commerce solution Volusion has a blog post dedicated to "leveraging the psychology of discounts to make more money". And Psychology Today has an article about "why limited-time offers entice shoppers to buy" that appears to be geared towards encouraging online stores to use time restrictions that act as an "effective purchase trigger".
If the shopper is rushed into the purchase but is in fact getting a good deal, then the ethical dilemma is somewhat muted. But it's when some degree of creative accounting takes place, and the deals are inflated and overstated so as to trick shoppers into thinking they're getting a bigger discount than they really are, that it becomes problematic.
How stores calculate "discounts"
The issue lies in the fact that there is little governing just how retailers calculate their "discounts".
Most stores claim their discounts are reductions from a recommended retail price (RRP). But stores and third-party sellers on marketplace platforms are free to make up these RRPs themselves, or claim hypothetical historical maximums as their base for calculating their discounts.
With this in mind, Business Insider South Africa evulated how accurate these two stores' deals are, on a monthly basis using the following methodology:
- On a random day each month, Business Insider South Africa uses a random number generator to select 10 out of the first 100 products posted, and record the claimed recommended retail price, the website's selling price, and its advertised discount.
- We then do online research for each product in order to determine alternate prices readily available at competing online stores in South Africa.
- From that we calculate just how accurate the claimed discount was.
- In cases where there is no local equivalent of the product advertised, we will draw another random product to review.
It's important to note that in most instances, the stores in question were actually offering something of a discount over their competitors - but in the vast majority of cases, Business Insider was able to find the same product at a price below that of the claimed RRP.
Here's how claimed discounts stacked up at Takealot and OneDayOnly.
Across the 10 random products reviewed in May 2021, OneDayOnly claimed to offer discounts to a total of R10,060.
After researching the various products, Business Insider found that a more accurate cumulative discount amounted to R4,725.90.
On the day in question, there was a 72.2%, or R5,334.10 difference, between the discounts claimed by OneDayOnly, and those available elsewhere.
Biggest overstated discount: R4,001.00 (AngryFit Motorised X60 Scooter with Golf Accessories).
Across the 10 random products reviewed in May 2021, Takealot claimed to offer discounts to a total of R1,667.00.
After researching the various products, Business Insider found that a more accurate cumulative discount amounted to R315.00.
On the day in question, there was a 136.4%, or R1,352 difference, between the discounts claimed by Takealot, and those available elsewhere.
Biggest overstated discount: R455 (Transcend DDR4-2666 SO-DIMM 16GB JetRam Memory).